Washington’s $10B Unmanned Industry

As Seattle frets about unmanned aircraft, Washington is erecting a multibillion-dollar industry.

Tad McGeer, multimillionaire godfatherof the state’s drone industry, was heading home the other day from his office in the rain-swept Columbia River Gorge town of White Salmon when he picked up his cell phone and dialed a Seattle reporter. In an earlier e-mail exchange, the reporter had asked about the growth of drone manufacturing in Washington, and McGeer had written back, “Are you jumping on the hype bandwagon, or do you want to discuss reality?”

Tad McGeer, founder of two drone manufacturing companies in Washington. He has little patience for the privacy concerns surrounding drones, but does have misgivings about their widespread use in war.

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The hype he referred to was the drone-phobia that hovers over any discussion of unmanned flying vehicles, from the small model-sized planes that buzz Seattle neighborhoods to the multi-ton aerial robots that are used in war and prowl Washington’s northern border. To McGeer’s dismay, the public doesn’t seem to like them much—the airborne snoops fly right up and peek through your window, don’t they?—even though civilian drone use is growing and the Pentagon is expanding its drone air force, including four bases in the Evergreen State.

Assured by the reporter that reality rocks, McGeer agrees to call. “I’ve got about a 20-minute drive,” said the 56-year-old Stanford aeronautical engineer, steering towards Hood River, Oregon, across the old two-lane toll bridge stretching three-quarters of a mile over the Columbia. He’s the pioneering entrepreneur behind the Washington-made unmanned aircraft systems—UAS, as they’re know in the industry—that linger over the desert and mountain terrain of Afghanistan in search of U.S. combat intelligence and terrorist targets. The 44-pound, gas-powered military drone he named the ScanEagle is also flown by a dozen other nations, and while most are used for war reconnaissance, some countries employ the ScanEagle for domestic security, as Japanese self-defense forces do, or to spy on drug cartels, as the Colombian military does.

“As I drive,” says McGeer, in a plucky mood, “we can entertain each other.” The man who developed the concept of passive dynamic walking—a principle used in the movement of legged robots—doesn’t duck interviews, but picks his moments. In part, McGeer wants to discuss his former business partner, the Boeing Co.—its corporate lobbying and, in particular, Boeing’s role in helping send his little drone off to war.

McGeer founded his company in 1992 in his Silicon Valley garage, then moved the aerial startup to the Gorge in 1994. He named his business Insitu, a title derived from a Latin phrase meaning “in position.” In McGeer’s variation, it was “chosen because we wanted to make measurements in situ in the atmosphere—measurements you can trust.”

Those were the halcyon days for the U.S. drone industry: Largely out of the public eye, companies like Insitu developed bigger and faster UAS for wider application. By 2001, McGeer had come up with a factory-produced line of flying robots featuring a 10-foot wingspan and a top speed of 92 m.p.h., launched by a pneumatic catapult. Scientists used the original versions of the ScanEagle for geological surveys, and fishermen flew the machines to track schools of tuna.

But not long after 9/11, along came Boeing, with bigger fish in mind.

The aerospace giant took notice of the little company on the Washington-Oregon border, impressed by the ScanEagle’s simplicity of flight: Camera- and computer-equipped, the drone soars from its launcher in a buzzing frenzy, capable of spying the world below for 24 hours; mission complete, it is then brought safely home by its ground handler’s remote device. As the swept-wing craft comes into view, absently buzzing along, it suddenly snags itself on a sky hook, flopping on a rope like a wounded bird, then is powered down. Try that with a 747.

With war drums pounding, Boeing, the nation’s #2 defense contractor, saw the drone’s cameras as capable of taking otherwise-impossible money shots of the hidden enemy, giving an edge to U.S. troops then arriving in Afghanistan and subsequently Iraq. That hunch—to become the military’s low-risk eye in the sky—paid off. Over the next 10 years, the ScanEagle would log 712,000 operational hours and 76,000 sorties in the war zones, earning millions for Insitu.

The robotic spies first saw U.S. combat in 2004, and were launched from Navy ships starting in 2005. An early turning point for Insitu/Boeing came in what’s known as the Second Battle of Fallujah in 2004, the bloodiest single fight in the Iraq War (95 Americans killed, 560 wounded; 1,500 enemy killed). ScanEagle was found to have been essential in aiding U.S. Marines in the close-up urban battle by sending back global positioning coordinates and real-time pictures of enemy positions, likely saving many American lives. With that, government contracts began flowing.

Once struggling to make a profit, Insitu was reportedly grossing upward of $100 million by 2008 when Boeing bought outright the then-360-employee corporation from McGeer and his partners for $400 million. Today, the wholly owned Boeing subsidiary is housed in offices, warehouses, and production facilities scattered along the northern side of the Columbia in Bingen and White Salmon in Klickitat County; Stevenson in Skamania County; and further west to Vancouver in Clark County. Now with 800 employees and a flight range across the river in Boardman, Oregon, Boeing’s operations anchor the Gorge economy. Annual sales are reported to be in the $400 million range. (Boeing won’t release per-unit sales costs, but an Air Force document shows the ScanEagle was selling for $3.2 million apiece in 2006—launcher/sky hook and other equipment included). Just four months ago, Boeing/Insitu won a two-year, $190 million contract to supply U.S. Special Forces with Scan-Eagles and perhaps a newer, larger Insitu drone: the Integrator, featuring a 16-foot wingspan and a long-range infrared camera.

Even with that military gadgetry attached, the Boeing products are tame little cousins of the killer drones of leading UAS defense contractor General Atomics of San Diego. Its 5-ton Reaper and Predator drones fly the U.S. borders but are more notoriously used in Afghanistan, Pakistan, and sometimes Yemen, bearing 100-pound, radar-guided Hellfire antitank missiles. By comparison, says McGeer, the ScanEagle, at 4.5 feet long, “isn’t big enough to carry a useful bang.” However, the Navy has tested a 2-pound, next-generation mini-missile that someday could be fitted to a ScanEagle, reports Aviation Week.

Details of most of ScanEagle’s military or federal law-enforcement uses are classified, although WikiLeaks, the online records-dumping site, has spilled a few of Boeing’s beans. According to a confidential State Department cable released by the site, the Colombian military began using the Washington-made ScanEagle for deadly counterterrorism and counter-narcotics operations in 2006. The cable states the drones “have proven useful before, during, and after strikes against the FARC,” the Revolutionary Armed Forces of Colombia, the main guerrilla opposition. In one instance, when a Columbian Air Force bomber was nearby, a drone sent back real-time video of FARC fighters leaving a truck, and “an aerial assault was launched within 30 minutes.” In a separate incident, a ScanEagle vid showed several vehicles being “loaded with coca,” which were then destroyed by a helicopter gunship. Apparently, such actions continue: Columbia media in March reported that the U.S. government “donated” six Insitu ScanEagles to the Colombian Air Force for the war against drugs.

Though the Boeing sale made him wealthy, McGeer tells the reporter as he drives along, he still has regrets about his drone’s military deployment. It may be small and unarmed, but “people have been killed because of ScanEagle,” he says. “It was not encouraging to see the video I watched in 2004. It was from our drone, over a position in Iraq. [The camera] was focused on small figures, people moving around.” An Army drone pilot in a faraway control booth, keying off the streaming vid, launched a ground rocket. “After a few seconds, there’s a big explosion,” says McGeer. “Then nothing.”

Conversely, U.S. troops have avoided death because of strategic information gleaned from ScanEagle’s robotic eye—intelligence gathered at the risk of merely losing a machine rather than a flesh-and-blood reconnaissance team. “People often remind me we’re on the side of the good guys,” says McGeer. “And I believe that. But I imagine there have been many instances like that [one in the video]. That’s what these aircraft are used for. Why else would the military want to use them? They’re looking for threats, which they then kill.”

Boeing/Insitu spokesperson Jill Vacek says the ScanEagle enables the survival of U.S. troops, helping to “ensure [that our] sons and daughters are returned home safely.” In 2009, she notes, a ScanEagle launched from a Navy ship, the USS Bainbridge, aided the rescue of Merchant Marine Captain Richard Phillips of the U.S. cargo ship Maersk Alabama, who was being held by Somali pirates. That drone is now part of an exhibit at the Museum of Flight in Seattle.

But there’s no doubt that McGeer is right: When the ScanEagle is launched, it’s often for matters of life and death. And in 2005, the year after seeing the Iraq video, McGeer left Insitu; he sold off his share to Boeing three years later. He now operates the other drone-manufacturing business in Klickitat County, Aerovel, developing a commercial vertical-take-off-and-landing flying robot called the Flexrotor. The two firms (“If there are any other drone makers in Washington, I don’t know of them,” says McGeer, although there’s at least one other, Marcus UAV Inc., in Tacoma) have helped spawn a local cottage industry of suppliers, and boosted the Gorge economy beyond its lumber and tourism dollars from visiting windsurfers, parasailers, and hang-gliders.

The firms also help make our state a perfect microcosm of America’s drone wars: Because of these homegrown businesses and the U.S. military, Washington will play a key role in the advancement of drones as they become smarter, and perhaps deadlier, in years to come. Already economists predict that the state’s UAS industry will expand by nearly $10 billion within the next decade. At the same time, from peeped-on Seattle neighbors to back-pedaling police forces, Washington is also witnessing the blowback that comes from a citizenry uncomfortable with the pivotal role drones now play in everything from military strikes to weekend recreation.

A fledging Seattle-based movement, No Drones Washington State (which didn’t respond to requests for comment), has staked out Boeing/Insitu as one of its protest targets, and one of its sister groups, No Drones Illinois, has demonstrated outside Boeing headquarters in Chicago, asking stockholders to reject the corporation’s “killer drone” investments beyond the ScanEagle. They were likely referring to Boeing’s weaponized stealth/combat drone currently being tested in California: The 36,000-pound, remote-controlled, wing-shaped warplane called the Phantom Ray could someday be flown in combat by a ground-based pilot thousands of miles away. The drone has been in the testing stage for years, the tab picked up by Boeing in a race with other contractors who see war increasingly fought by robots.

The UAS themselves come with a warning to their masters: Remote pilots are reportedly experiencing some of the same real-time and post-traumatic stress that airborne military pilots suffer in the cockpit. The Pentagon took the emotional wounds of its telewar pilots seriously enough last year to propose handing out medals for heroic endurance in the remote booths, sometimes thousands of miles away from the war front. But new Defense Secretary Chuck Hagel put the kibosh on that in April, suggesting a small special pin be awarded instead.

McGeer is experiencing his own kind of long-distance remorse over the ScanEagle. “I’d much rather be creating wealth,” he says, “than participating in wars.” Thanks in great deal to his pioneering efforts, the state has been able to do both.

When President Obama promised to cut back on his killer drone flights last month, he laid out stricter rules for the secret terror-war missions that in Pakistan alone have killed as many as 3,500 suspected militants and up to 900 civilians, according to the London-based Bureau of Investigative Journalism. Four of the dead were American citizens suspected of being or associating with terrorists—three of them killed collaterally.

On a much different scale, Mayor Mike McGinn also sought to control the use of drones in Seattle, grounding a proposed Seattle Police unmanned spy force before it could fly its first sortie. In an edict that snared national headlines, he told SPD to discontinue plans to fly two small, camera-equipped drone helicopters intended to probe crime and accident scenes. The ACLU and others convinced him that more rules had to be in place to prevent drone spying on citizens.

The White House and City Hall moves seem to have at least temporarily pushed public concern over drones back to Defcon Five: at ease. Obama won additional praise for asking Congress to consider revoking the post-9/11 order that gave presidents the power to use “all necessary and appropriate force” to kill suspected enemies without due process. And coming down against the two Canadian-made Draganflyer X6 rotor drones, costing $41,000 each, was an easy political step for McGinn in an election year. (Though the mayor told SPD to return the minicopters, the manufacturer wouldn’t take them back, police spokesperson Sean Whitcomb said last week. “As of now, they’re sitting in a box” while the department weighs its next move, Whitcomb says).

In truth, Obama-ordered drone flights have not ended; two weeks after his speech, a U.S. drone killed the Taliban’s #2 man in Pakistan. And Seattle—along with the rest of the state, where an increasing swarm of flying military robots are about to land—will eventually have to deal with the rise of the drones inevitably swarming the skies in all sizes and shapes, military to civilian, lethal to pesky. The latter intruders are already here, as a Capitol Hill woman found out recently.

“This afternoon,” she complained last month in a message to a blog, Capitol Hill Seattle, “a stranger set an aerial drone into flight over my yard and beside my house near Miller Playfield [several blocks east of Group Health hospital]. I initially mistook its noisy buzzing for a weed-whacker on this warm spring day. After several minutes, I looked out my third-story window to see a drone hovering a few feet away. My husband went to talk to the man on the sidewalk outside our home who was operating the drone with a remote control, to ask him to not fly his drone near our home. The man insisted that it is legal for him to fly an aerial drone over our yard and adjacent to our windows. He noted that the drone has a camera, which transmits images he viewed through a set of glasses. He purported to be doing ‘research.’ We are extremely concerned, as he could very easily be a criminal who plans to break into our house or a peeping-tom.”

What to do? Who owns the air? Are there laws? The answers are few, and don’t apply across the board. When operating in home skies, drones like the ScanEagle, says Insitu spokesperson Vacek, face some regulations—flying as “public aircraft” in domestic airspace, for example. And the FAA must first issue a Certificate of Authorization for the flight.

But the sky appears to be the limit for a hobbyist’s model drone (although the FAA asks they stay below 400 feet). “The woman tells us she called police but they decided not to show up when the man left,” CHS blog reported.

Readers chimed in, one of them offering a practical quick fix to the drone invader: “SLINGSHOT (problem solved) Wanna borrow mine?” Others advised the woman against overreacting to a model plane: “She should step back and consider that not everyone who uses remote-control gadgets are ‘peeping Toms,’ the same that not everyone who may use a chain saw is a potential ‘murderer,’ ” wrote one.

The story got picked up by blogs across the U.S., including TheAtlanticWire.com, which asked drone expert and UCLA professor John Villasenor to comment. Villasenor, who spoke to Congress last month about proposed drone laws, drew a parallel to a camera-ready Peeping Tom: “Using a drone just outside the window to obtain those same photographs would be just as much an invasion of privacy.”

The office of Seattle City Attorney Pete Holmes hasn’t given droning laws much thought yet, nor fielded any pressing legal queries. At the moment, says spokesperson Kimberly Mills, “The city doesn’t regulate private drones.” However, she adds in an e-mail, “The person who was ‘droned’ [on Capitol Hill] might have a [civil] tort action against the drone operator—that’s a ‘might.’ ” The state is just beginning to tackle the issue, and, federally, Congress is making its first moves. Democrat Sen. Mark Udall of Colorado last month introduced the Safeguarding Privacy and Fostering Aerospace Innovation Act. If approved, the bill would provide fines of up to $15,000 “for any person to use a civil unmanned aircraft system to willfully conduct surveillance of another person.” It also proposes that all robotic aircraft be clearly marked with the name, address, and telephone number of the owner.

Ryan Calo, an assistant law professor at the University of Washington, says current law doesn’t do enough to protect privacy. The Supreme Court has allowed police officers in airplanes or helicopters to peer into a person’s backyard, and “I see no reason why these precedents should not extend readily to drones,” says Calo, who testified in March before the Senate Judiciary Committee, urging Congress to proceed cautiously.

It’s unclear where model and toy drones might fit into the legislative bundle. But, with sizzling sales, they’re a growing concern. Amazon’s warehouse shelves are regularly cleaned out by customers seeking the children’s version of one of Obama’s favorite drones, the Predator—a $10 item that, when supplies run low, sometimes resells on Amazon Marketplace for nearly $50. That’s still considerably cheaper than other toy/model drones, such as the Parrot AR, available at Toys“R”Us for $300. The sleek, battery-operated quadcopter has a 160-foot flying range and a speed of 11 m.p.h. and is controlled by a smart-phone app allowing the pilot to see on the hand-held screen what the drone sees from the air. More than 500,000 have already been sold. Also hot on the drone wish list are slightly larger, commercial mini-aircraft, such as 3D Robotics’ $500 drone that is guided by a GPS and is used by farmers, among others, to watch over crops and field conditions.

Then there’s that considerably larger drone squadron gathering on the state’s horizon. Homeland Security, for one, flies two unarmed, 10,000-pound Predator-B drones along the state’s northern border to help agents search for illegal entries and drug smugglers. The drones’ controllers are based in North Dakota and fly nearly 1,000-mile, 20-hour missions in a flight room at Grand Forks Air Force Base.

The Pentagon, meanwhile, is planning to extend drone testing, training, and flight operations to four local military bases, including Whidbey Island Naval Air Station and the Army’s Joint Base Lewis-McChord. A 2012 Department of Defense report to Congress said those bases plus McChord Air Force Base and the Yakima Training Center are designated as sites to “conduct continental United States–based missions” within the next few years, using such bomb-carrying tactical drones as the Predator.

At Whidbey, the Navy is proposing to add remotely controlled spy planes with the wingspan of a Boeing 737. The Pentagon is proposing to buy altogether 68 of the drones— Grumman’s MQ-4C Triton—totaling $11 billion. Used for ocean-crossing marine surveillance, the Triton is designed to fly 11,500 miles without refueling. As part of the revamping, the base will also update its manned air force, replacing older Lockheed Martin P-3C aircraft with new Boeing P-8A Poseidons, a military version of the 737. The Poseidon is assembled in Renton and will be essential to the drone program, the Navy says. Boeing has been awarded $5 billion to build 24 Poseidons, with the Navy expected to buy 93 more.

These Washington sites are part of a global expansion of the military’s flying-robot program. A recent report in The Nation identified at least 60 U.S. remote-control bases run by the military and the CIA around the world, with more to come. Such sites increase the chances of creating remote-controlled U.S. air strikes anywhere on the planet, with little accountability and a minimal foreign footprint.

Actually, make that toeprint. The technology already exists to build a lethal drone that can be carried in a backpack. Equipped with a camera and warhead, it could be flown like a cruise missile into a target zone. Trevor Timm of the Electronic Freedom Foundation, based in San Francisco, says one of the arguments made by supporters of Seattle’s police-drone program was that the remote choppers could stay airborne only for short periods. But, he points out, Lockheed Martin has been bragging about a 13-pound drone that can be recharged by a ground laser and stay airborne indefinitely. Security expert Glenn Greenwald, a columnist for London’s The Guardian who writes frequently about drones (and who last week broke the story about the NSA’s phone-data collection), notes that domestic use of UAS is growing rapidly, and any doubts that weaponized drones won’t be used on U.S. soil is “patently irrational.” The Montgomery County Sheriff’s Office in Texas, for example, is already figuring out how its new $300,000 ShadowHawk drone can be outfitted to fire Tasers and beanbags.

These smaller and deadlier drones pose an inevitable question: What happens should these new creations fall into the hands of madmen and terrorists? (Iran already claims to have captured two ScanEagles and begun reproducing them.) Take the 2-pound Switchblade UAS, used by the military in Afghanistan. Armed with a tiny warhead, the little drone can be flown directly into the face of its human target and exploded. Time called it one of the Best Inventions of 2012. Al-Qaida may someday agree.

Wherever the market goes, Washington’s drone industry is likely to follow; it's already ranked second economically in the U.S. behind California’s, according to the Association for Unmanned Vehicle Systems International. The state would get a measurable boost should it become one of six new federally designated drone test sites planned by the FAA, which is busy trying to formulate new rules for domestic drone use. The University of Washington, Washington State University, and Battelle’s Pacific Northwest National Laboratory in Richland (whose mission includes developing counterterrorism technologies) are part of a state coalition currently competing with almost 40 other states to bring the testing to Grant County International Airport in Moses Lake. Its 13,500-foot-long runway is one of America’s longest—not that it’s required for the stationary launched drones, but it could handle any large jets needed in conjunction with the program. One of the main purposes of the test site, according to FAA documents, is to “provide valuable experience to help us safely and efficiently integrate UASs into the same airspace with manned airplanes.”

The state is projected by the AUVSI to gain almost 10,000 jobs and rack up $7.8 billion in revenue over the next decade as the industry expands. Along with the military, Boeing will be one of the driving forces: In the Gorge, Insitu has already created a network of secondary providers spanning two states. “We utilize more than 500 suppliers in Washington and Oregon,” says company spokesperson Vacek, who notes that goods bought from local businesses represented 40 percent of Insitu’s spending in 2012.

Betty Barnes, the mayor of Bingen (population 724), tells Seattle Weekly that in addition to bumping up tax revenue and creating jobs, Insitu’s products have made the locals proud, saving troop lives. “Insitu has been a great asset and partner to the city of Bingen,” Barnes says. “During the economic downturn when most cities had businesses closing, Bingen had four new restaurants open.”

She notes that the town has seen just one protest, back in 2010, outside Insitu’s office on Bingen’s no-stoplight main drag. Video from that day shows a dozen chanting demonstrators from Portland and Seattle matched in number by local drone supporters and Insitu workers who counter-chanted their support for the troops. “We all want the war to end as soon as possible,” then-Insitu CEO Steve Sliwa told a reporter from the White Salmon Enterprise, congratulating demonstrators on their peaceful tactics.

Tad McGeer, Insitu’s progenitor, hopes to be a factor in the Gorge’s predicted economic growth from drones, although this time around he’s focusing on peaceful uses for his newest UAS. Aerovel’s 40-pound Flexrotor, capable of flying 2,500 miles at altitudes of up to 25,000 feet on only three gallons of fuel, is ready for its vertical closeup, he says—monitoring weather and surveying earth’s geology, for example.

But first the public will have to shake off some of its misconceptions, as he sees it, about drones.

“The concern about invasion of privacy is oversold,” McGeer is saying to the reporter on his drive home. “It’s nonsense.”

That drone hobbyist who buzzed the Capitol Hill woman’s home? “He’s no more of a threat than someone who would peek in her windows,” McGeer says, bouncing along in his car. Actually, he’s less of a threat: You can hear a drone hovering outside, says McGeer. A voyeur? Not so much. “I don’t understand what’s so threatening about drones. Go up top to the Space Needle and look down. Are you invading people’s privacy? Of course not. Any aircraft anywhere has that capability. That includes an unmanned aircraft with a camera.”

McGeer was among those who showed up in Olympia this legislative session to talk about a bill that would regulate the use of drones by local and state agencies. Among other restrictions, House Bill 1771 would require law-enforcement agencies to obtain warrants for drone flights, except in emergency situations. Legislation to control drone use has been introduced in more than 30 other states, but none has passed, and Bill 1771 is stuck in committee, where it has been pronounced dead. Though police didn’t like the idea—Mitch Barker of the Washington Association of Sheriffs and Police Chiefs said it was an issue better left to the courts to decide on a case-by-case basis—Boeing was credited with killing the proposal. Boeing spokesperson Sue Bradley, in a statement, said it would have been “counterproductive to rush into regulating a burgeoning industry.” The bill’s disappointed sponsor, Republican Rep. David Taylor, told The Seattle Times, “This is all about profit . . . profit over people’s rights.” A similar bill in Oregon, which includes restrictions on drone use by the public, passed the House but at last report was languishing in the Senate.

“Boeing didn’t kill it,” McGeer says of the Washington legislation. “The bill was very ill-conceived, and was never expected to be passed. It was a message bill,” merely testing the waters. The message he gave to legislators, McGeer says, was about “what you can and can’t see with a drone camera, and the economics of doing so—that if you wanted to take pictures from an aircraft, you could spend $100 an hour flying around in a Cessna, but that the demand for that activity isn’t very high.” His point, he says, is that you can do this type of spy thing now, but few actually care to.

Drones, McGeer says as his car hits the homestretch, despite their growth and potential, are an emerging technology in a still-budding industry. “If you believe the hype about the surge of privacy invasion, there should be a lot of customers at my door,” the Aerovel founder says. Any time now, he hopes to have his first one.